conference call presentation · normalized roe expansion from 10.2% in 2q16 after adjusting 2q16...

Conference Call PresentationSecond Quarter 2017AUGUST 3, 2017

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Cautionary Statement Regarding Forward Looking InformationThis document and the remarks made within this presentation may include, and officers and representatives of American International Group, Inc. (AIG) may from time to time make, projections, goals, assumptions and statements that may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These projections, goals, assumptions and statements are not historical facts but instead represent only AIG’s belief regarding future events, many of which, by their nature, are inherently uncertain and outside AIG’s control. These projections, goals, assumptions and statements include statements preceded by, followed by or including words such as “will,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “focused on achieving,” “view,” “target,” “goal,” or “estimate.” These projections, goals, assumptions and statements may address, among other things, AIG’s: exposures to subprime mortgages, monoline insurers, the residential and commercial real estate markets, state and municipal bond issuers, sovereign bond issuers, the energy sector and currency exchange rates; exposure to European governments and European financial institutions; strategy for risk management; actual and anticipated sales of businesses or asset divestitures or monetizations; restructuring of business operations, including anticipated restructuring charges and annual cost savings; generation of deployable capital; strategies to increase return on equity and earnings per common share; strategies to grow net investment income, efficiently manage capital, grow book value per share, and reduce expenses; anticipated organizational and business changes; strategies for customer retention, growth, product development, market position, financial results and reserves; management of the impact that innovation and technology changes may have on customer preferences, the frequency or severity of losses and/or the way AIG distributes and underwrites its products; segments’ revenues and combined ratios; and management retention plans. It is possible that AIG’s actual results and financial condition will differ, possibly materially, from the results and financial condition indicated in these projections, goals, assumptions and statements. Factors that could cause AIG’s actual results to differ, possibly materially, from those in the specific projections, goals, assumptions and statements include: changes in market conditions; negative impacts on customers, business partners and other stakeholders; the occurrence of catastrophic events, both natural and man-made; significant legal proceedings; the timing and applicable requirements of any new regulatory framework to which AIG is subject as a nonbank systemically important financial institution and as a global systemically important insurer; concentrations in AIG’s investment portfolios; actions by credit rating agencies; judgments concerning casualty insurance underwriting and insurance liabilities; AIG’s ability to successfully manage Legacy portfolios; AIG’s ability to successfully reduce costs and expenses and make business and organizational changes without negatively impacting client relationships or AIG’s competitive position; AIG’s ability to successfully dispose of, or monetize, businesses or assets; judgments concerning the recognition of deferred tax assets; judgments concerning estimated restructuring charges and estimated cost savings; and such other factors discussed in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in AIG’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017 (which will be filed with the Securities and Exchange Commission), Part I, Item 2. MD&A in AIG’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 and Part II, Item 7. MD&A and Part I, Item 1A. Risk Factors in AIG’s Annual Report on Form 10-K for the year ended December 31, 2016.

AIG is not under any obligation (and expressly disclaims any obligation) to update or alter any projections, goals, assumptions or other statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise. This document and the remarks made orally may also contain certain non-GAAP financial measures. The reconciliation of such measures to the most comparable GAAP measures in accordance with Regulation G is included in the Second Quarter 2017 Financial Supplement available in the Investor Information section of AIG's corporate website, www.aig.com, as well as in the Appendix to this presentation.

Note: Amounts presented may not foot due to rounding.

2

Pursuing Profitable Growth

Culture andTalent

Underwriting discipline

Empowering field

Balance andDiversification

Capital and Growth

Technology andInnovation

Mix of products, geographies and client segments

Optimize international footprint

Strong free cash flow and balance sheet

Targeting organic and inorganic growth opportunities

Technology and data analytics

Transform delivery of insurance

3

Consolidated

2Q17 Key Themes

Consumer

Legacy & Capital

PTOI improvement led by strong results in Personal Insurance Personal Insurance reflects improved operating efficiency and lower-than-expected loss activity Stable earnings in both the Individual and Group Retirement businesses; positive impact on Assets

Under Administration and fee income from equity market tailwinds Continued pressure on Individual Retirement and Group Retirement net flows Ongoing expense control and portfolio optimization in both Personal Insurance and Life Insurance

After-tax operating income of $1.4B ($1.53 per diluted share) Consolidated Adjusted AIG ROE of 10.5% (10.0% YTD) Core Normalized ROE of 9.9% (9.2% YTD) Book Value Per Share (ex. AOCI) growth of 4% YTD

Balance sheet strength and capital management Total capital returned to shareholders of $2.7B in 2Q17 Legacy capital release of $0.8B ($7.9B since 4Q15) Continue to maintain strong capital ratios and Parent liquidity AIG Parent liquidity of $7.8B at June 30, 2017

Commercial

Continuing our emphasis on the use of tools and improving our business mix NPW decreased 9%1 reflecting continued execution on our strategic portfolio actions Catastrophe losses of $178 million were below expectations Higher loss experience in Global Property Continued expense management

1) On a constant dollar basis and excluding divestitures.

4

Change in Core Normalized ROE

1) The change in Core Normalized ROE includes a ~100 bps adverse impact from an increase in second half 2016 loss estimates, primarily related to U.S. Casualty.2) Largely driven by share repurchases and dividends.3) Mainly driven by improvement in Consumer Insurance, including a reduction in Operating GOE.4) Represents lost earnings related to the sale of UGC, which closed in December 2016.5) Mainly driven by reduction in alternative investments, the impact of ADC and tightening of investment grade and high yield spreads.6) Other, net mainly driven by change in Core effective tax rate

1.0%

2Q16 IncreasedLoss Estimates

CapitalManagement

OperatingImprovement

UGCEarnings

Net InvestmentIncome

Other, net 2Q17

Core Normalized Return On Equity – 2Q16 vs 2Q17

1

10.1%

2 3 4

+80 bps

9.9%

5

1.2%

1.7%

(0.7%)(1.0%) (0.4%)

6

5

Consolidated Operating Financial Highlights($ in millions, except per share amounts) 2Q16 2Q17Pre-tax operating income (loss):Commercial Insurance

Liability and Financial Lines $815 $586 Property and Special Risks 126 130

Total Commercial Insurance 941 716 Consumer Insurance

Individual Retirement 505 558 Group Retirement 265 266 Life Insurance 26 106 Personal Insurance 152 330

Total Consumer Insurance 948 1,260 Other Operations (176) (274)

Total Core 1,713 1,702 Legacy Portfolio 207 431 Total pre-tax operating income $1,920 $2,133 After-tax operating income attributable to AIG $1,313 $1,449 After-tax operating income attributable to AIG per diluted share $1.15 $1.53 Normalized Return On Equity:Consolidated 8.3% 9.1% Core 10.1% 9.9% Legacy Portfolio 2.4% 5.6% Book Value Per Common Share (BVPS): Dec. 31, 2016 June 30, 2017BVPS $76.66 $81.62 BVPS – Ex. AOCI $73.41 $76.12 Adjusted BVPS1 $58.57 $60.31

1) Book value per common share, ex. AOCI & DTA.

6

Commercial InsuranceRobert S. Schimek Executive Vice President & Chief Executive Officer of Commercial

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8.9

(0.1) (0.3) (1.0)

7.5

30% 30%

24% 28%

26%23%

3%17%

19%

1H'16 FXImpact

Divestitures RiskSelection

1H'17

7.7%6.3%

7.6%

1.8%

9.5%

2Q16 1Q'17 2Q17

61.7%66.1%

4.0%

93.8% 95.0%

2Q16 2Q17

Normalized ROE

Commercial Insurance – Select MetricsAccident Year Combined Ratio, As Adjusted

Pro formaImpact of

2H’16 loss estimate1

As reported Accident Year

Loss Ratio

ExpenseRatio

Pro formaImpact of


1

Pro formaNormalized ROE1

65.7%1

ReportedNormalized ROE

28.1 28.9

Net Premiums Written ($B)

PropertySpecial Risks Financial Lines Casualty

Property & Special

Risks46%

PSR42%

Liability & Financial

Lines54%

LFL58%

1) Pro forma amounts are inclusive of the impact of 2H’16 loss estimates.

Ascot

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Commercial Insurance – Liability and Financial Lines

Net Premiums Written ($B) Combined Ratios

Key Takeaways

Normalized ROE expansion from 10.2% in 2Q16 after adjusting 2Q16 for the increase in loss estimates recorded in 2H’16.

NPW decline reflects continuing portfolio optimization.

AYLR essentially unchanged after adjusting 2Q16 for the increase in loss estimates recorded in 2H16.

Expense Ratio increase driven by earned premium decline outpacing expense reduction.

PYD primarily relates to construction defect and wrap business in older accident years, partially offset by amortization of deferred gain related to ADC.

($ in millions) 2Q16 2Q17

Net premiums written $2,321 $2,085

Net premiums earned 2,726 2,110

Underwriting income (loss) 113 (51)

Net investment income 702 637

Pre-tax operating income $815 $586

Normalized After-tax operating income $622 $407

Avg. attributed equity $20,005 $14,357

Normalized ROE 12.4% 11.3%

36% 34%

16%16%

48%50%

2Q16 2Q17

U.S. Casualty Int'l Casualty Financial Lines

$2.3$2.1

70.4 76.1 67.1 72.7

5.7 5.7 13.2 12.8 13.2 12.8

12.2 13.5 12.2 13.5

2Q16 2Q17 2Q16 2Q17

Loss Ratio Acquisition Ratio GOE Ratio

Calendar Year Accident Year, As Adjusted

101.5298.22

PYD Loss Ratio

3.3

1) Includes reinsurance assumptions from International Casualty related to non-US casualty exposures.2) Pro forma amounts are inclusive of the impact of 2H’16 loss estimates.3) Includes adjustment for ceded premiums under reinsurance contracts related to prior accident years.

1

102.4 99.0

3.43

Pro formaImpact of


76.1%2

Pro formaImpact of


72.8%2

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Commercial Insurance – Property and Special Risks


Key Takeaways

Normalized ROE driven by higher non-CAT Property losses, partially offset by improved performance in Special Risks. The Normalized ROE reflects the full AAL of $266 million, while actual CAT losses of $178 million were better than expectation.

NPW decline reflects portfolio optimization, primarily in Property and Programs, and divestitures.

Higher AYLR driven by higher losses in Property, offset by improvement in Special Risks.

PYD driven by two large claims in Aviation.




Underwriting income (28) (47)



AAL1 $317 $266




59% 62%

8%

33%

38%

2Q16 2Q17

Property Special Risks

$2.2

$1.7

69.7 70.8

54.0 57.2

1.6 1.6

18.6 18.5 18.6 18.5

13.1 13.6 13.1 13.6

2Q16 2Q17 2Q16 2Q17

Loss Ratio Acquisition Ratio GOE Ratio


103.02

87.32

18.0

(2.3)

6.6

Severe Loss RatioCAT Loss Ratio PYD Loss Ratio

6.6

1) Represents one quarter of the average annual loss expectation.2) Pro forma amounts are inclusive of the impact of 2H’16 loss estimates.

11.1

2.5

7.8 7.8

102.989.3

Pro formaImpact of


71.3%2

Pro formaImpact of


55.6%2

Ascot

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Consumer InsuranceKevin HoganExecutive Vice President &Chief Executive Officer of Consumer

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Consumer Insurance – Select Metrics

Pre-tax Operating Income ($M)

Normalized ROE Premiums and Deposits (P&D) and NPW ($B)

General Operating Expenses ($M)

$505 $558

$265 $266 $26

$106 $152

$330

2Q16 2Q17Individual Retirement Group Retirement Life Insurance Personal Insurance

$128 $108 $87 $66

$171 $141

$443 $386

2Q16 2Q17Individual Retirement Group Retirement Life Insurance Personal Insurance

9.7%

13.3%

2Q16 2Q17

$4.6 $2.9

$1.8

$1.8

$0.9

$0.9

$2.9 $2.8

P&D NPW P&D NPW

Individual Retirement Group Retirement Life Insurance Personal Insurance

$948

$829

$7.3

2Q16 2Q17

$5.6

$1,260

$701

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$1.2 $0.6

$1.2

$0.8

$0.8

$0.7

$1.4

$0.7

2Q16 2Q17

Consumer Insurance – Individual Retirement($ in millions) 2Q16 2Q17

Premiums and deposits $4,611 $2,892 Premiums 45 31 Policy fees 178 192 Net investment income 1,020 1,003 Advisory fee and other income 266 157 Total operating revenues 1,509 1,383 Benefits and expenses 1,004 825 Pre-tax operating income $505 $558 Normalized after-tax operating income $311 $359

Avg. attributed equity $11,397 $11,046 Normalized ROE 10.9% 13.0%

3.00%3.30%

2.13% 2.26%

2Q16 2Q17Variable and Index Annuities Fixed Annuities

Net Flows ($B) Base Net Investment Spread

Key Takeaways Focus on diversified product portfolio and disciplined

pricing

Continued active spread management

Equity market having positive impact on Assets Under Administration, fee income and DAC amortization

Sales and net flows reflect slowdown of annuity industry sales

Assets Under Administration

56%32%

12%

General accountsSeparate accountsRetail Mutual Funds

As of June 30, 2017 = $144.8B

Premiums and Deposits ($B)

$4.6

Fixed Annuities Variable Annuities Index Annuities Retail Mutual Funds

$(0.5)$(0.9)

$0.4

$(0.3)

$0.7 $0.6

$0.7

$(0.2)

2Q16 2Q17

$1.3

$2.9

$(0.7)

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Consumer Insurance – Group Retirement

1.90%1.65%

2Q16 2Q17

Base Net Investment Spread

Key Takeaways Strong position in target markets driven by trusted

advisor service model

Equity market having positive impact on Assets Under Administration and fee income

Spread compression from the run-off of higher yielding assets and reinvestment in the low yield environment

Assets Under Administration

47%

35%

18%

General accountsSeparate accountsGroup Retirement mutual funds

As of June 30, 2017 = $99.2B

Net Flows ($B)

2Q16 2Q17

Premiums and Deposits ($B)

$1.8


Premiums and deposits $1,837 $1,802 Premiums 5 4 Policy fees 95 101 Net investment income 555 535 Advisory fee and other income 52 56 Total operating revenues 707 696 Benefits and expenses 442 430 Pre-tax operating income $265 $266 Normalized after-tax operating income $170 $178


2Q16 2Q17

$0.03

$1.8

$(0.2)

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Consumer Insurance – Life InsuranceKey Takeaways Multi-year restructuring underway including

administrative platform consolidation, distribution simplification, and narrowed product focus

Strong growth in new business sales for both term and universal life insurance

Reduction in domestic GOE due to staff reductions and exit of certain group benefit channels

Mortality experience comparable to 2Q16 and within pricing expectations

New Business Sales

1) Other income primarily related to commission and profit sharing revenues received by Laya Healthcare from the distribution of insurance products.

63% 50%

26%37%12%

13%

2Q16 2Q17

By Product

Term Universal Life Health & Other

$78

82%86%

18%

14%

2Q16 2Q17

By Geography

U.S. U.K.

$78

($ in millions)


Premiums and deposits $879 $947 Premiums 360 400 Policy fees 343 357 Net investment income 271 261 Other income1 14 12 Total operating revenues 988 1,030 Benefits and expenses 962 924 Pre-tax operating income $26 $106 Normalized after-tax operating income $7 $62


$106 $106

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Consumer Insurance – Personal Insurance


Key Takeaways

Operating performance benefiting from strategic repositioning and focus on target markets

AY Combined Ratio improvement driven primarily by favorable loss experience and continued GOE efficiency

Minimal catastrophe losses in the quarter

55.6 50.7 54.9 50.8

25.9 26.6 25.9 26.6

15.5 13.8 15.5 13.8

2Q16 2Q17 2Q16 2Q17Loss Ratio Acquisition Ratio GOE Ratio




Underwriting income 86 247







2.1

(1.4)

PYD Loss RatioCAT Loss Ratio

(0.6)

97.0 96.3

58% 58%

42% 42%

2Q16 2Q17

Personal Lines Accident and Health

$2.9

91.1 91.2$2.8

0.1

(0.2)

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Q&A and Closing Remarks

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Appendix

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Book Value Per Common Share (Ex. AOCI) Composition

$47.87 $47.98 $49.34

$10.70 $11.12 $10.97

$14.84 $15.48 $15.81

December 31, 2016 March 31, 2017 June 30, 2017

Core Legacy DTA

$73.41 $74.58 $76.12

Growth of 4% year-to-date

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Maintaining Discipline and Focus on Expenses

General Operating Expenses, Operating Basis – 2Q16 vs 2Q17

$92 $77 $22

2Q16As reported

FX& GOE of

Advisor Group& UGC

StaffReductions

Prof Fees, T&Eand Other

2Q17As reported

$2,439

4%

1

1) Represents a reduction in GOE of Advisor Group ($25 million) and UGC ($55 million), which were divested, and by $12 million of foreign exchange impact.2) Represents a reduction in GOE of Advisor Group ($70 million) and UGC ($105 million), which were divested. Foreign exchange impact is minimal.

General Operating Expenses, Operating Basis – 1H’16 vs 1H’17

$175 $235 $124

YTD16As reported

FX& GOE of

Advisor Group& UGC

StaffReductions

Prof Fees, T&Eand Other

YTD17As reported

7%

$2,248

GOE reductions were primarily driven by staff reductions and overall expense discipline around non-headcount related expenses.

2

$5,031$4,497

($ in millions)

20

Transformation of Reserve Risk

Nominal Reserve as of June 30, 2017

ADC fundamentally transforms AIG’s reserve risk profile by economically eliminating 80% of the reserve risk from some of the most volatile components of our Commercial reserves up to the limit specified in the ADC Agreement1.

Legacy$6.1B4

Personal Insurance$4.3B

OtherCommercial2

$22.9B

AIG Layer Below Attachment $14.0B

BRK$13.1B

AIG$3.3B

ADC3

Covered Reserves $30.4BNon-ADC

Reserves $33.3B

Note: Total reserves are presented on a nominal basis before Workers’ Compensation discount.1) The gain at inception and in any subsequent period is deferred and amortized over the estimated reinsurance recovery period of paid losses using an effective interest rate method. All

reserve charges arising from the covered reserves will continue to reduce AIG’s net income dollar-for-dollar.2) Other commercial lines consist of Property & Special Risks and International Liability & Financial Lines, as well as U.S. Liability & Financial Lines for Accident Years 2016 and after.3) U.S. Liability & Financial Lines for Accident Years 2015 and prior, including the Casualty component of the Program business.4) Excludes a portion of reserves related to certain long-duration business in Japan, which is recorded in Other policyholder funds on the Consolidated Balance Sheet.

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Parent Liquidity

Changes in Parent Liquidity ($B)

Balance at3/31/17

InsuranceCompany

Distributions

Debt issuance Sale ofArch Shares

LegacyAsset

Monetization

ShareRepurchases &

Dividends

Interest Paid& Other

Balance at6/30/17

$7.3

Cash & S/T Inv.

$2.3

UnencumberedSecurities

$5.0

$7.8

Includes:P&C Dividend: $0.2BLife Dividend: $1.0BTax Pmts = $0.5B

Cash & S/T Inv.

$3.5

UnencumberedSecurities

$4.3

$1.7

$1.1 $0.4$0.8

($2.7)($0.8)

1) Total proceeds from the sale of Arch shares was $652 million, of which $391 million was received by AIG Parent.

1

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Legacy($ in billions)

12/31/16 6/30/17

$6.9 $6.5

12/31/16 6/30/17

$38.4 $38.7

12/31/16 6/30/17

Attributed Equity Legacy Investments Legacy P&CRun-off Reserves

Legacy Life InsuranceRun-off Reserves

Key Takeaways $0.8B of asset monetizations in 1H’17.

$2.1B

$3.9B

$1.1B

$0 $1 $2 $3 $4 $5 $6 $7 $8

Progress to Date

1H'17Legacy Assets

FY'16Legacy Run-OffInsurance Books

FY'16Legacy

Investments

YE'15

Legacy Monetization – Progress to date

$7.9B Achieved through 6/30/2017

$6.7 $6.0

12/31/16 6/30/17

$10.6(18%)1

1) Legacy Attributed equity as a percentage of AIG adjusted shareholders’ equity.

$9.9(18%)1

$0.8B

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Strong Capital Position

Ratios: Dec. 31,2016

June 30,2017

Hybrids / Total capital 0.9% 0.9%

Financial debt / Total capital 20.8% 22.4%

Total Hybrids & Financial debt / Total capital 21.7% 23.3%

$76.9 $74.3

$20.4 $21.7 $0.8 $0.9

December 31, 2016 June 30, 2017

Total Equity Financial Debt Hybrids

Capital Structure ($ in Billions)

1

$98.1 $96.9

Year-end Domestic LifeInsurance Companies

Domestic Property Casualty

Insurance Companies

2015 502% (CAL) 403% (ACL)

2016 509% (CAL) 411% (ACL)

Risk Based Capital Ratios2

Credit Ratings3

S&P Moody’s Fitch A.M. Best

AIG – Senior Debt BBB+ Baa1 BBB+ NR

AIG Property Casualty – FSR A+ A2 A A

AIG Life – FSR A+ A2 A+ A

1H’17 2Q17Share repurchases $6,000 $2,415Warrant repurchases - -Dividends declared 597 290Total $6,597 $2,705

Capital Return ($ in Millions)

1) Includes AIG notes, bonds, loans and mortgages payable, and AIG Life Holdings, Inc. (AIGLH) notes and bonds payable, and junior subordinated debt.2) The inclusion of RBC measures is intended solely for the information of investors and is not intended for the purpose of ranking any insurance company or for use in connection with any marketing,

advertising or promotional activities. ACL is defined as Authorized Control Level and CAL is defined as Company Action Level. RBC ratio for Domestic Life Insurance Companies excludes holding company, AGC Life Insurance Company.

3) As of the date of this presentation, Moody’s and A.M. Best have Stable outlooks; S&P and Fitch have Negative outlooks. For property Casualty Insurance Companies FSR and Life Insurance Companies FSR, ratings only reflect those of the core insurance companies. 24

Acronyms & Definitions, Glossary of Non-GAAP Financial Measures, and Non-GAAP Reconciliations

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AAL - Average annual loss expectationYTD – Year-to-dateYoY – Year-over-yearNPW – Net premiums writtenFX – Foreign exchange

Acronyms

Acronyms & Definitions

26

Glossary of Non-GAAP Financial MeasuresThroughout this presentation, we present our financial condition and results of operations in the way we believe will be most meaningful and representative of our business results. Some of the measurements we use are “non-GAAP financial measures” under Securities and Exchange Commission rules and regulations. GAAP is the acronym for “generally accepted accounting principles” in the United States. The non-GAAP financial measures we present may not be comparable to similarly-named measures reported by other companies. The reconciliations of such measures to the most comparable GAAP measures in accordance with Regulation G are included within the relevant tables or in the Second Quarter 2017 Financial Supplement available in the Investor Information section of AIG’s website, www.aig.com.

We use certain of our operating performance measures, as discussed beginning in the next paragraph below, to define our forward-looking financial targets. Our financial targets are provided based on management’s estimates. The most directly comparable GAAP financial targets would be heavily dependent upon results that are beyond management’s control and the outcome of these items could be significantly different than management’s estimates. Therefore, we do not provide quantitative reconciliations for these financial targets as we cannot predict with accuracy future actual events (e.g., catastrophe losses) and impacts from changes in macro economic market conditions, including the interest rate environment (e.g. estimate for DIB & GCM returns, fair value changes on PICC Investments, net reserve discount change and returns on alternative investments).

Book Value per Common Share, Excluding Accumulated Other Comprehensive Income (AOCI) and Book Value per Common Share, Excluding AOCI and Deferred Tax Assets (DTA) (Adjusted Book Value per Common Share) are used to show the amount of our net worth on a per-share basis. We believe these measures are useful to investors because they eliminate items that can fluctuate significantly from period to period, including changes in fair value of our available for sale securities portfolio, foreign currency translation adjustments and U.S. tax attribute deferred tax assets. These measures also eliminate the asymmetrical impact resulting from changes in fair value of our available for sale securities portfolio wherein there is largely no offsetting impact for certain related insurance liabilities. We exclude deferred tax assets representing U.S. tax attributes related to net operating loss carryforwards and foreign tax credits as they have not yet been utilized. Amounts for interim periods are estimates based on projections of full-year attribute utilization. As net operating loss carryforwards and foreign tax credits are utilized, the portion of the DTA utilized is included in these book value per common share metrics. Book value per common share, excluding AOCI, is derived by dividing Total AIG Shareholders’ equity, excluding AOCI, by total common shares outstanding. Adjusted Book Value per Common Share, is derived by dividing Total AIG shareholders’ equity, excluding AOCI and DTA (Adjusted Shareholders’ Equity), by total common shares outstanding. AIG Return on Equity – After-tax Operating Income Excluding AOCI and DTA (Adjusted Return on Equity) is used to show the rate of return on shareholders’ equity. We

believe this measure is useful to investors because it eliminates items that can fluctuate significantly from period to period, including changes in fair value of our available for sale securities portfolio, foreign currency translation adjustments and U.S. tax attribute deferred tax assets. This measure also eliminates the asymmetrical impact resulting from changes in fair value of our available for sale securities portfolio wherein there is largely no offsetting impact for certain related insurance liabilities. We exclude deferred tax assets representing U.S. tax attributes related to net operating loss carryforwards and foreign tax credits as they have not yet been utilized. Amounts for interim periods are estimates based on projections of full-year attribute utilization. As net operating loss carryforwards and foreign tax credits are utilized, the portion of the DTA utilized is included in Adjusted Return on Equity. Adjusted Return on Equity is derived by dividing actual or annualized after-tax operating income attributable to AIG by average Adjusted Shareholders’ Equity. AIG Normalized Return on Equity further adjusts Adjusted Return on Equity for the effects of certain volatile or market related items. We believe this measure is useful to

investors because it presents the trends in our consolidated return on equity without the impact of certain items that can experience volatility in our short-term results. Normalized Return on Equity is derived by excluding the following tax adjusted effects from Adjusted Return on Equity: the difference between actual and expected (i) catastrophe losses, (ii) alternative investment returns, and (iii) Direct Investment book (DIB) and Global Capital Markets (GCM) returns; fair value changes on PICC investments; update of actuarial assumptions; Life insurance incurred but not reported (IBNR) death claim charge; and prior year loss reserve development. Core and Legacy Portfolio Attributed Equity – is an attribution of total AIG Adjusted Shareholders’ Equity to each of our modules within Core and Legacy Portfolio based on

our internal capital model, which incorporates the respective risk profiles. Attributed equity represents our best estimates based on current facts and circumstances and will change over time. Core and Legacy Portfolio Return on Equity – After-tax Operating Income (Adjusted Return on Attributed Equity) is used to show the rate of return on attributed equity.

Return on Attributed Equity is derived by dividing actual or annualized After-tax Operating Income by Average Attributed Equity. Core and Legacy Portfolio Normalized Return on Attributed Equity (Normalized Return on Attributed Equity) further adjusts Adjusted Return on Attributed Equity for the

effects of certain volatile or market-related items. We believe this measure is useful to investors because it presents the trends in our Return on Attributed Equity without the impact of certain items that can experience volatility in our short-term results. Normalized Return on Attributed Equity is derived by excluding the following tax adjusted effects from Return on Attributed Equity: the difference between actual and expected (i) catastrophe losses, (ii) alternative investment returns, and (iii) DIB and GCM returns; fair value changes on PICC investments; update of actuarial assumptions; Life insurance IBNR death claim charge; and prior year loss reserve development. Normalized return on attributed equity adjusted for loss estimates is derived by excluding updates to loss estimates in the second half of 2016 from Normalized After-tax

Operating Income. We believe this measure is useful to investors because it provides for normalized return on attributed equity on a comparable basis.

Glossary of Non-GAAP

27

http://www.aig.com/

Glossary of Non-GAAP Financial Measures

After-tax Operating Income Attributable to Core and Legacy Portfolio is derived by subtracting attributed interest expense and income tax expense from pre-tax operating income. Attributed debt and the related interest expense is calculated based on our internal capital model. Tax expense or benefit is calculated based on an internal attribution methodology that considers among other things the taxing jurisdiction in which the operating segments and geographies conduct business, as well as the deductibility of expenses in those jurisdictions.

Normalized After-tax Operating Income Attributable to Core and Legacy Portfolio further adjusts After-tax Operating Income attributable to Core and Legacy Portfolio for the effects of certain volatile or market related items. We believe this measure is useful to investors because it presents the trends in after tax operating income without the impact of certain items that can experience volatility in our short-term results. Normalized After-tax Operating Income attributable to Core and Legacy Portfolio is derived by excluding the following tax adjusted effects from After-tax Operating Income: the difference between actual and expected (i) catastrophe losses, (ii) alternative investment returns, and (iii) DIB and GCM returns; fair value changes on PICC investments; update of actuarial assumptions; Life insurance IBNR death claim charge; and prior year loss reserve development (PYD), net of reinsurance premium adjustments.

Normalized after-tax operating income (loss) per share is derived by dividing normalized after-tax operating income(loss) by diluted weighted average shares outstanding. We believe that the use of this measure is useful to investors because it presents our after-tax operating income on a per share basis without the impact of certain items that can experience volatility in our short-term results.

Operating Revenues exclude Net realized capital gains (losses), income from non-operating litigation settlements (included in Other income for GAAP purposes) and changes in fair value of securities used to hedge guaranteed living benefits (included in Net investment income for GAAP purposes). Operating revenues is a GAAP measure for our operating segments.

General Operating Expenses, Operating Basis (Operating GOE), is derived by making the following adjustments to general operating and other expenses: include (i) certain loss adjustment expenses, reported as policyholder benefits and losses incurred and (ii) certain investment and other expenses reported as net investment income, and exclude (i) advisory fee expenses, (ii) non-deferrable insurance commissions, (iii) direct marketing and acquisition expenses, net of deferrals, (iv) non-operating litigation reserves and (v) other expense related to an asbestos retroactive reinsurance agreement. We use General operating expenses, operating basis, because we believe it provides a more meaningful indication of our ordinary course of business operating costs, regardless of within which financial statement line item these expenses are reported externally within our segment results. The majority of these expenses are employee-related costs. For example, Other acquisition expenses and losses and loss adjustment expenses primarily represent employee-related costs in the underwriting and claims functions, respectively. Excluded from this measure are non-operating expenses (such as restructuring costs and litigation reserves), direct marketing expenses, insurance company assessments and non-deferrable commissions. We also exclude the impact of foreign exchange and the expenses of AIG Advisor Group and UGC, which have been divested, when measuring period-over-period fluctuations in General operating expenses, Operating basis.

We use the following operating performance measures because we believe they enhance the understanding of the underlying profitability of continuing operations and trends of our business segments. We believe they also allow for more meaningful comparisons with our insurance competitors. When we use these measures, reconciliations to the most comparable GAAP measure are provided on a consolidated basis.

Pre-tax Operating Income (PTOI) is derived by excluding the following items from income from continuing operations before income tax. This definition is consistent across our modules (including geography). These items generally fall into one or more of the following broad categories: legacy matters having no relevance to our current businesses or operating performance; adjustments to enhance transparency to the underlying economics of transactions; and measures that we believe to be common to the industry. PTOI is a GAAP measure for our operating segments.


• changes in fair value of securities used to hedge guaranteed living benefits;• changes in benefit reserves and deferred policy acquisition costs (DAC), value of

business acquired (VOBA), and sales inducement assets (SIA) related to net realized capital gains and losses;

• loss (gain) on extinguishment of debt;• net realized capital gains and losses;• non-qualifying derivative hedging activities, excluding net realized capital gains and

losses;• income or loss from discontinued operations;• net loss reserve discount benefit (charge);

• pension expense related to a one-time lump sum payment to former employees;

• income and loss from divested businesses;• non-operating litigation reserves and settlements;• reserve development related to non-operating run-off insurance business;• restructuring and other costs related to initiatives designed to reduce

operating expenses, improve efficiency and simplify our organization; and• the portion of favorable or unfavorable prior year reserve development for

which we have ceded the risk under retroactive reinsurance agreements and related changes in amortization of the deferred gain.

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Glossary of Non-GAAP Financial Measures After-tax Operating Income Attributable to AIG (ATOI) is derived by excluding the tax effected PTOI adjustments described above and the following tax items from net income

attributable to AIG:

– deferred income tax valuation allowance releases and charges; and

– uncertain tax positions and other tax items related to legacy matters having no relevance to our current businesses or operating performance.

Ratios: We, along with most property and casualty insurance companies, use the loss ratio, the expense ratio and the combined ratio as measures of underwriting performance. These ratios are relative measurements that describe, for every $100 of net premiums earned, the amount of losses and loss adjustment expenses (which for CommercialInsurance excludes net loss reserve discount), and the amount of other underwriting expenses that would be incurred. A combined ratio of less than 100 indicates underwriting income and a combined ratio of over 100 indicates an underwriting loss. Our ratios are calculated using the relevant segment information calculated under GAAP, and thus may not be comparable to similar ratios calculated for regulatory reporting purposes. The underwriting environment varies across countries and products, as does the degree of litigation activity, all of which affect such ratios. In addition, investment returns, local taxes, cost of capital, regulation, product type and competition can have an effect on pricing and consequently on profitability as reflected in underwriting income and associated ratios.

Accident year loss and combined ratios, as adjusted: both the accident year loss and combined ratios, as adjusted, exclude catastrophe losses and related reinstatement premiums, prior year development, net of premium adjustments, and the impact of reserve discounting. Natural catastrophe losses are generally weather or seismic events having a net impact on AIG in excess of $10 million each. Catastrophes also include certain man-made events, such as terrorism and civil disorders that meet the $10 million threshold. We believe the as adjusted ratios are meaningful measures of our underwriting results on an ongoing basis as they exclude catastrophes and the impact of reserve discounting which are outside of management’s control. We also exclude prior year development to provide transparency related to current accident year results.

Underwriting ratios are computed as follows:

a) Loss ratio = Loss and loss adjustment expenses incurred ÷ Net premiums earned (NPE)

b) Acquisition ratio = Total acquisition expenses ÷ NPE

c) General operating expense ratio = General operating expenses ÷ NPE

d) Expense ratio = Acquisition ratio + General operating expense ratio

e) Combined ratio = Loss ratio + Expense ratio

f) Accident year loss ratio, as adjusted (AYLR) = [Loss and loss adjustment expenses incurred – CATs – PYD] ÷ [NPE +/(-) Reinstatement premiums (RIPs) related to catastrophes +/(-) RIPs related to prior year catastrophes + (Additional) returned premium related to PYD on loss sensitive business + Adjustment for ceded premiums under reinsurance contracts related to prior accident years]

g) Accident year combined ratio = AYLR + Expense ratio

h) Catastrophe losses (CATs) and reinstatement premiums = [Loss and loss adjustment expenses incurred – (CATs)] ÷ [NPE +/(-) RIPs related to catastrophes] – Loss ratio

i) Prior year development net of (additional) return premium related to PYD on loss sensitive business = [Loss and loss adjustment expenses incurred – Prior year loss reserve development unfavorable (favorable) (PYD), net of reinsurance] ÷ [NPE +/(-) RIPs related to prior year catastrophes + (Additional) returned premium related to PYD on loss sensitive business] – Loss ratio

Premiums and deposits: includes direct and assumed amounts received and earned on traditional life insurance policies, group benefit policies and life-contingent payout annuities, as well as deposits received on universal life, investment-type annuity contracts and mutual funds.

Results from discontinued operations are excluded from all of these measures.


29

Non-GAAP Reconciliations Book Value Per Share and Return on Equity

(in millions, except per share data)

Book Value Per Share 4Q16 1Q17 2Q17Total AIG shareholders' equity (a) $ 76,300 $ 74,069 $ 73,732Less: Accumulated other comprehensive income (AOCI) 3,230 3,781 4,962Total AIG shareholders' equity, excluding AOCI (b) 73,070 70,288 68,770Less: Deferred tax assets (DTA) 14,770 14,585 14,287Total adjusted shareholders' equity (c) $ 58,300 $ 55,703 $ 54,483Total common shares outstanding (d) 995.3 942.5 903.4Book value per common share (a÷d) $ 76.66 $ 78.59 $ 81.62Book value per common share, excluding AOCI (b÷d) 73.41 74.58 76.12Adjusted book value per common share (c÷d) 58.57 59.10 60.31

Six Months Ended(in millions, except per share data) June 30,

2Q16 2Q17 2016 2017Return On Equity (ROE) ComputationsActual or Annualized net income (loss) attributable to AIG (a) $ 7,652 $ 4,520 $ 3,460 $ 4,630Actual or Annualized after-tax operating income (loss) attributable to AIG (b) $ 5,252 $ 5,796 $ 4,156 $ 5,632Average AIG Shareholders' equity (c) $ 89,232 $ 73,901 $ 89,374 $ 74,700Less: Average AOCI 6,892 4,372 5,440 3,991Less: Average DTA 16,220 14,436 16,397 14,547Average adjusted shareholders' equity (d) 66,120 55,093 67,537 56,162ROE (a÷c) 8.6% 6.1% 3.9% 6.2%

After-tax operating income (loss) as reported (e) $ 1,313 $ 1,449 $ 2,078 $ 2,816Adjustments to arrive at Normalized after-tax operating income (loss):

Catastrophe losses above (below) expectations 17 (101) (72) (173)(Better) worse than expected alternative returns (1) 4 (73) 468 (192)(Better) worse than expected DIB & GCM returns (28) (93) 229 (122)Fair value changes on PICC investments 55 (4) 122 (18)Life Insurance - IBNR death claims - - (16) -Unfavorable (favorable) prior year loss reserve development 19 82 (20) 103

Normalized after-tax operating income (loss) (f) $ 1,380 $ 1,260 $ 2,789 $ 2,414Adjusted return on equity (b÷d) 7.9% 10.5% 6.2% 10.0%Normalized return on equity (f÷d) (2) 8.3% 9.1% 8.3% 8.6%

Normalized after-tax operating income(loss) per share:Weighted average shares outstanding - diluted 1,140.0 948.2 1,163.1 976.6Normalized after-tax operating income (loss) per share $ 1.21 $ 1.33 $ 2.40 $ 2.47

(1) The expected rate of return on alternative investments used was 8% for all periods presented.(2) Normalizing adjustments are tax effected using a 35% tax rate and computed based on average attributed equity for the respective periods. 30

Non-GAAP ReconciliationsPre-tax and After-tax Operating Income - Consolidated

(in millions)2Q16 2Q17

Pre-tax income (loss) from continuing operations $ 2,858 $ 1,667Adjustments to arrive at Pre-tax operating income (loss)

Changes in fair value of securities used to hedge guaranteed living benefits (120) (80)Changes in benefit reserves and DAC, VOBA and SIA related to

net realized capital gains (losses) 64 (58)Loss (gain) on extinguishment of debt 7 (4)Net realized capital (gains) losses (1,042) 69(Income) loss from divested businesses (225) 60Non-operating litigation reserves and settlements (7) (80)Unfavorable (favorable) prior year development and related amortization changes ceded

under retroactive reinsurance agreements (5) 251Net loss reserve discount (benefit) charge 300 260Pension expense related to a one-time lump sum payment to former employees - 1Restructuring and other costs 90 47Pre-tax operating income (loss) $ 1,920 $ 2,133

Net income (loss) attributable to AIG $ 1,913 $ 1,130Adjustments to arrive at After-tax operating income (loss)

(amounts net of tax, at a rate of 35%, except where noted):Uncertain tax positions and other tax adjustments (a) (63) 66Deferred income tax valuation allowance (releases) charges (a) 35 (8)Changes in fair value of securities used to hedge guaranteed living benefits (78) (52)Changes in benefit reserves and DAC, VOBA and SIA related to

net realized capital gains (losses) 42 (38)Loss (gain) on extinguishment of debt 5 (2)Net realized capital (gains) losses (b) (655) 31(Income) loss from discontinued operations (a) 10 (8)(Income) loss from divested businesses (c) (146) 20Non-operating litigation reserves and settlements (5) (52)Unfavorable (favorable) prior year development and related amortization changes ceded

under retroactive reinsurance agreements (3) 162Net loss reserve discount (benefit) charge 200 170Pension expense related to a one-time lump sum payment to former employees - - 1Restructuring and other costs 58 30

After-tax operating income (loss) $ 1,313 $ 1,449

Weighted average diluted shares outstanding 1,140.0 948.2Income (loss) per common share attributable to AIG (diluted) $ 1.68 $ 1.19After-tax operating income (loss) per common share attributable to AIG (diluted) $ 1.15 $ 1.53

(a) Includes impact of tax only adjustments.(b) The tax effect includes the impact of non-U.S. tax rates lower than 35% applied to foreign exchange (gains) or losses attributable to those jurisdictions where foreign earnings are considered to be indefinitely reinvested.(c) The tax effect included the impact of non-U.S. tax rates lower than 35% applied to (income) or losses on dispositions by foreign affiliates whose tax bases in divested subsidiaries differed from U.S. GAAP carrying values. 31

Non-GAAP ReconciliationsGeneral Operating and Other Expenses

(in millions) Six Months EndedJune 30,

2Q16 2Q17 2016 2017

General operating and other expenses, GAAP basis $ 2,586 $ 2,182 $ 5,589 $ 4,625

Restructuring and other costs (90) (47) (278) (228)

Other expense related to retroactive reinsurance agreement 5 - 12 -

Pension expense related to a one-time lump sum payment to former employees - (1) - (1)

Non-operating litigation reserves - 74 (3) 70Total general operating and other expenses included in pre-tax operating income 2,501 2,208 5,320 4,466

Loss adjustment expenses, reported as policyholder benefits and losses incurred 350 296 691 600

Advisory fee expenses (173) (77) (490) (154)

Non-deferrable insurance commissions and other (121) (130) (243) (262)

Direct marketing and acquisition expenses, net of deferrals, and other (133) (58) (277) (170)

Investment expenses reported as net investment income and other 15 9 30 17Total general operating expenses, operating basis $ 2,439 $ 2,248 $ 5,031 $ 4,497

Less: FX Impact 12 -

Less: GOE of Advisor Group 25 70

Less: GOE of UGC 55 105Total general operating expenses, operating basis, Ex. FX & GOE of AIG Advisor Group and UGC $ 2,347 $ 2,248 $ 4,856 $ 4,497

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Non-GAAP ReconciliationsPTOI, ATOI and Normalized ATOI

Commercial Insurance - Liability and Financial Lines(in millions)

2Q16 2Q17Pre-tax operating income (loss) $ 815 $ 586

Interest expense on attributed financial debt 50 73Operating income (loss) before taxes: 765 513Income tax expense (benefit) 237 141

After-tax operating income (loss) (a) $ 528 $ 372Adjustments to arrive at normalized after-taxoperating income (loss):

Catastrophe losses above (below) expectations (2) (1)(Better) worse than expected alternative returns* 14 (23)Fair value changes on PICC investments 18 -Unfavorable (favorable) prior year loss reserve development 64 59

Normalized after-tax operating income (b) 622 $ 407Loss estimates recorded in 2H'16 (109)Normalized after-tax operating income adjusted for loss estimates $ 513

Ending attributed equity 20,094 14,376Average attributed equity (c) 20,005 14,357Adjusted return on attributed equity (a÷c) 10.6 % 10.4 %Normalized return on attributed equity** (b÷c) 12.4 % 11.3 %Normalized return on attributed equity adjusted for loss estimates 10.2 %

Commercial Insurance - Property and Special Risks(in millions)




Catastrophe losses above (below) expectations 20 (59)(Better) worse than expected alternative returns* - (10)Fair value changes on PICC investments 7 -Unfavorable (favorable) prior year loss reserve development (26) 32

Normalized after-tax operating income (b) $ 65 $ 24

Ending attributed equity 8,976 $ 8,190Average attributed equity (c) 8,930 8,179Adjusted return on attributed equity (a÷c) 2.9 % 3.0 %Normalized return on attributed equity** (b÷c) 2.9 % 1.2 %

Total Commercial Insurance(in millions)

2Q16 1Q17 2Q17Pre-tax operating income (loss) $ 941 $ 849 $ 716

Interest expense on attributed financial debt 84 105 107Operating income (loss) before taxes: 857 744 609

Income tax expense (benefit) 265 270 176After-tax operating income (loss) (a) $ 592 $ 474 $ 433Adjustments to arrive at normalized after-taxoperating income (loss):

Catastrophe losses above (below) expectations 18 (42) (60)(Better) worse than expected alternative returns* 14 (70) (33)Fair value changes on PICC investments 25 - -Unfavorable (favorable) prior year loss reserve development 38 30 91

Normalized after-tax operating income (b) $ 687 $ 392 $ 431

Ending attributed equity 29,070 22,506 22,566Average attributed equity (c) 28,935 24,927 22,536Adjusted return on attributed equity (a÷c) 8.2 % 7.6 % 7.7 %Normalized return on attributed equity** (b÷c) 9.5 % 6.3 % 7.6 %

* The expected rate of return on alternative investments used was 8% for all periods presented.** Normalizing adjustments are tax effected including the impact of non-U.S. tax rates (25% for Europe and 30% for Japan) applied to the normalizing adjustments attributable to the respective geography. Normalized return on attributed equity is computed based on normalized after-tax operating income divided by average attributed equity for the respective periods. 33


Consumer Insurance - Group Retirement(in millions)

2Q16 2Q17

Pre-tax operating income (loss) $ 265 $ 266Interest expense on attributed financial debt 8 -Operating income (loss) before taxes: 257 266Income tax expense (benefit) 78 82

After-tax operating income (a) $ 179 $ 184Adjustments to arrive at normalized after-taxoperating income (loss):

(Better) worse than expected alternative returns* (9) (6)Normalized after-tax operating income (b) $ 170 $ 178

Ending attributed equity 6,242 6,079Average attributed equity (c) 6,210 6,057Adjusted return on attributed equity (a÷c) 11.5 % 12.2 %Normalized return on attributed equity** (b÷c) 11.0 % 11.8 %

Consumer Insurance - Individual Retirement(in millions)

2Q16 2Q17

Pre-tax operating income $ 505 $ 558Interest expense on attributed financial debt 15 -Operating income (loss) before taxes: 490 558Income tax expense (benefit) 162 188

After-tax operating income (a) $ 328 $ 370Adjustments to arrive at normalized after-taxoperating income (loss):



* The expected rate of return on alternative investments used was 8% for all periods presented.** Normalizing adjustments are tax effected including the impact of non-U.S. tax rates (25% for Europe and 30% for Japan) applied to the normalizing adjustments attributable to the respective geography. Normalized return on attributed equity is computed based on normalized after-tax operating income divided by average attributed equity for the respective periods.

Consumer Insurance - Life Insurance(in millions)





Ending attributed equity 2,741 2,581Average Attributed equity (c) 2,733 2,563Adjusted return on attributed equity (a÷c) 1.8 % 10.1 %Normalized return on attributed equity** (b÷c) 1.0 % 9.7 %

Consumer Insurance - Personal Insurance(in millions)




Catastrophe losses above (below) expectations - (43)(Better) worse than expected alternative returns* 16 -Fair value changes on PICC investments 2 -Unfavorable (favorable) prior year loss reserve development (25) -



34


Other Operations (including consolidations and eliminations)(in millions)

2Q16 2Q17Pre-tax operating income (loss) $ (176) $ (274)

Interest expense (benefit) on attributed financial debt (160) (181)Operating income (loss) before taxes: (16) (93)Income tax expense (benefit) (50) (25)

After-tax operating income (loss) (a) $ 34 $ (68)

Adjustments to arrive at normalized after-taxoperating income (loss):

Catastrophe losses above (below) expectations - 3(Better) worse than expected alternative returns* 11 (1)(Better) worse than expected DIB & GCM returns 1 (3)Fair value changes on PICC investments 7 (4)Unfavorable (favorable) prior year loss reserve development (8) (8)

Normalized after-tax operating income (loss) (b) $ 45 $ (81)

Ending attributed equity (1,096) (1,041)Average attributed equity (c) (928) (460)

Total Consumer Insurance(in millions)

2Q16 2Q17

Pre-tax operating income (loss) $ 948 $ 1,260Interest expense on attributed financial debt 54 31Operating income (loss) before taxes: 894 1,229Income tax expense (benefit) 292 410


(Better) worse than expected alternative returns* (15) (20)Catastrophe losses above (below) expectations - (43)Fair value changes on PICC investments 2 -Unfavorable (favorable) prior year loss reserve development (25) -



* The expected rate of return on alternative investments used was 8% for all periods presented.** Normalizing adjustments are tax effected including the impact of non-U.S. tax rates (25% for Europe and 30% for Japan) applied to the normalizing adjustments attributable to the respective geography. Normalized return on attributed equity is computed based on normalized after-tax operating income divided by average attributed equity for the respective periods. 35


Legacy Portfolio(in millions)



After-tax operating income (loss) (a) $ 89 $ 253


Catastrophe losses above (below) expectations (1) (1)(Better) worse than expected alternative returns* (6) (19)(Better) worse than expected DIB & GCM returns (29) (90)Fair value changes on PICC investments 21 -Unfavorable (favorable) prior year loss reserve development 14 (1)


Ending attributed equity 14,742 9,912Average attributed equity (c) 14,884 10,195Adjusted return on attributed equity (a÷c) 2.4 % 9.9 %

Normalized return on attributed equity** (b÷c) 2.4 % 5.6 %

Total Core Six Months Ended(in millions) June 30,

2Q16 2Q17 2016 2017 Pre-tax operating income (loss) $ 1,713 $ 1,702 $ 2,860 $ 3,401

Interest expense (benefit) on attributed financial debt (22) (43) (45) (86)Operating income (loss) before taxes: 1,735 1,745 2,905 3,487Income tax expense (benefit) 507 561 786 1,117

After-tax operating income (loss) (a) $ 1,228 $ 1,184 $ 2,119 $ 2,370


Catastrophe losses above (below) expectations 18 (100) (69) (170)(Better) worse than expected alternative returns* 10 (54) 402 (177)(Better) worse than expected DIB & GCM returns 1 (3) 3 (4)Fair value changes on PICC investments 34 (4) 52 (18)Unfavorable (favorable) prior year loss reserve development 5 83 (36) 114

Normalized after-tax operating income (b) $ 1,296 $ 1,106 $ 2,471 $ 2,115

Ending attributed equity 51,331 44,571 51,331 44,571Average attributed equity (c) 51,236 44,898 51,997 45,816Adjusted return on attributed equity (a÷c) 9.6 % 10.5 % 8.2 % 10.3 %Normalized return on attributed equity** (b÷c) 10.1 % 9.9 % 9.5 % 9.2 %

* The expected rate of return on alternative investments used was 8% for all periods presented.** Normalizing adjustments are tax effected using a 35% tax rate and computed based on average attributed equity for the respective periods.

36

Non-GAAP ReconciliationsAccident Year Loss Ratio, as adjusted, and Accident Year Combined Ratio, as adjusted

Commercial Insurance - Property and Special Risks

2Q16 2Q17

Loss ratio 69.7 70.8

Catastrophe losses and reinstatement premiums (18.0) (11.1)

Prior year development net of premium adjustments 2.3 (2.5)

Accident year loss ratio, as adjusted 54.0 57.2

Combined ratio 101.4 102.9

Catastrophe losses and reinstatement premiums (18.0) (11.1)

Prior year development net of premium adjustments 2.3 (2.5)

Accident year combined ratio, as adjusted 85.7 89.3

Commercial Insurance - Liability and Financial Lines2Q16 2Q17

Loss ratio 70.4 76.1Prior year development, net of (additional) return premium on loss sensitive business (3.3) (1.8)Adjustment for ceded premiums under reinsurance contracts

related to prior accident years - (1.6)Accident year loss ratio, as adjusted 67.1 72.7

Combined ratio 95.8 102.4Prior year development, net of (additional) return premium on loss sensitive business (3.3) (1.8)Adjustment for ceded premiums under reinsurance contracts

related to prior accident years - (1.6)Accident year combined ratio, as adjusted 92.5 99.0

Consumer Personal Insurance

2Q16 2Q17Loss ratio 55.6 50.7Catastrophe losses and reinstatement premiums (2.1) (0.1)Prior year development net of premium adjustments 1.4 0.2

Accident year loss ratio, as adjusted 54.9 50.8

Combined ratio 97.0 91.1Catastrophe losses and reinstatement premiums (2.1) (0.1)Prior year development net of premium adjustments 1.4 0.2

Accident year combined ratio, as adjusted 96.3 91.2

Total Commercial Insurance2Q16 2Q17

Loss ratio 70.2 73.8Catastrophe losses and reinstatement premiums (7.5) (4.8)Prior year development, net of (additional) return premium on loss sensitive business (1.0) (2.1)Adjustment for ceded premiums under reinsurance contracts

related to prior accident years - (0.8)Accident year loss ratio, as adjusted 61.7 66.1

Combined ratio 98.3 102.7Catastrophe losses and reinstatement premiums (7.5) (4.8)Prior year development, net of (additional) return premium on loss sensitive business (1.0) (2.1)Adjustment for ceded premiums under reinsurance contracts

related to prior accident years - (0.8)Accident year combined ratio, as adjusted 89.8 95.0

37

Non-GAAP ReconciliationsPremiums (in millions)

Consumer Insurance: 2Q16 2Q17Premiums and deposits $ 7,327 $ 5,641Deposits (6,748) (5,042)Other (169) (164)Premiums $ 410 $ 435

why

Consumer Insurance - Individual Retirement:Premiums and deposits $ 4,611 $ 2,892Deposits (4,563) (2,862)Other (3) 1Premiums $ 45 $ 31

a

Consumer Insurance - Individual Retirement (Fixed Annuities):Premiums and deposits $ 1,221 $ 633Deposits (1,174) (604)Other - 4Premiums $ 47 $ 33

a

Consumer Insurance - Individual Retirement (Variable Annuities):Premiums and deposits $ 1,225 $ 841Deposits (1,225) (841)Other (2) (2)

1

Premiums $ (2) $ (2)1

a

Consumer Insurance - Individual Retirement (Index Annuities):Premiums and deposits $ 755 $ 720Deposits (755) (720)Other - -

1

Premiums $ - $ -1

a

Consumer Insurance - Individual Retirement (Retail Mutual Funds):Premiums and deposits $ 1,410 $ 698Deposits (1,410) (698)Other - -

1

Premiums $ - $ -1

a

Consumer Insurance - Group Retirement:Premiums and deposits $ 1,837 $ 1,802Deposits (1,832) (1,798)Other - -

1

Premiums $ 5 $ 4

Consumer Insurance - Life Insurance:Premiums and deposits $ 879 $ 947Deposits (353) (381)Other (166) (166)Premiums $ 360 $ 400 38

conference call presentation · normalized roe expansion from 10.2% in 2q16 after adjusting 2q16...

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